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Debt collection is a grimier business than you may realize

Lisa Fogarty

by

Lisa Fogarty

Lisa Fogarty has written numerous articles for USA Today, The Stir, Opposing Views and other publications. She has covered everything from red carpet events to the discovery of toxic PCBs on school windows. She lives on Long Island, N.Y....

The lack of rules and oversight when it comes to debt is shocking

If you've ever owed debt that you couldn't afford to pay off, you may be familiar with the dreaded phone calls from debt collectors that seem to always come two minutes after you've splurged on dinner out. Collectively, American households are in $12 trillion debt, and out of this amount, $436 billion of it is delinquent, as John Oliver explained on Last Week Tonight. In other words, debt collecting may just (sadly) be the most lucrative career of our lifetime.

Obviously, if you're sitting on debt that you can pay off, you should, as Oliver reminds us. But there are times when people are socked with unexpected medical bills for procedures or emergencies their insurance companies won't cover. There are examples of incidences in which banks will sell your debt to a debt buyer, and the only information the buyer receives comes through on an Excel spreadsheet. There could information about a debt you already paid off or one that has passed the statute of limitations in your state. No matter — debt buyers or debt collection agencies will still expect you to pay up.

Because debt buyers aren’t always scrupulous about checking their information about customers, a lot of people get flagged (or even sued) for debt they don’t recognize, Oliver says.

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Some of the tactics debt collectors use on customers are truly horrific. Some will try to collect on a debt after the debtor has passed away. Many have been caught lying to customers and breaking the law to collect debt. And debt buyers have been found to file more legal cases that any other plaintiff, Oliver says, so many, in fact, that the court doesn’t get to all of them, or has been known in some cases to spend four seconds on each case. That has a great deal to do with the fact that 90 to 95 percent of the lawsuits go unanswered by customers, which means the debt buyers win by default.

Wondering why debt buyers even bother? Excellent reason, Oliver points out: If they win the lawsuit, they have the power to garnish your wages in many states.

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Shocking discovery: There are states where you don’t have to have a license to buy or collect debt. To prove how absolutely insane this is, Oliver and his HBO team posed as debt buyers in Mississippi and attempted to set up shop by creating a company name and an official-looking website. Mission accomplished: They were given the personal information, social security numbers, and debt information for people with debts that passed the statute of limitations, as well as many who incurred debt because of medical expenses.

"There’s absolutely nothing wrong with that, except that there is absolutely everything wrong with that," Oliver said.

At the end of the day, Oliver pulled an even-better-than-Oprah moment by announcing he was able to get RIP Medical Debt to forgive the debt of all of the people with medical debt on their list. All of this just proves Oliver's important takeaway: The debt industry is in desperate need of more rules and oversight.

Before you go, check out our slideshow below:

The lack of rules and oversight when it comes to debt is shocking
Image: Tetra Images/Getty Images
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